House of Commons Hansard #20 of the 37th Parliament, 3rd Session. (The original version is on Parliament's site.) The word of the day was federal.

Topics

Federal-Provincial Fiscal Arrangements Act
Government Orders

10 a.m.

York West
Ontario

Liberal

Judy Sgro for the Minister of Finance

moved that Bill C-18, an act respecting equalization and authorizing the Minister of Finance to make certain payments related to health, be read the third time and passed.

Federal-Provincial Fiscal Arrangements Act
Government Orders

10:05 a.m.

Scarborough East
Ontario

Liberal

John McKay Parliamentary Secretary to the Minister of Finance

Mr. Speaker, thank you for the opportunity to enter into this debate.

I would like to start by thanking my colleagues on the finance committee for their cooperation on the bill. As hon. members know, the bill is of great significance to the provinces and to those of us in the House who want to see that the legislative timelines are met. I want to particularly acknowledge the help of the committee chair, the member for Etobicoke North, and all members on the committee from both sides of the House who dealt with this in an expeditious fashion.

The measures in the bill pertain to two of the four federal transfer programs, equalization and the Canada health and social transfer, the CHST as it is commonly known.

Through these programs, the territorial formula financing and the new health reform transfer, the federal government, in partnership with the provinces and territories, plays a key role in supporting the Canadian health system and other social programs.

As the largest federal transfer, the CHST provides the provinces and territories with cash payments and tax transfers in support of health care, post-secondary education, social assistance and social services, including early childhood development and early learning and child care.

Equalization, as hon. members know, is the federal government's most important program for reducing fiscal disparities among provinces. It ensures that the less prosperous provinces have the capacity to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

This is not about the level of equalization. This is about the payment of equalization and extending legislative authority to carry on with payments of equalization.

Bill C-18 supports these two important programs and makes it possible to reach two goals.

First, it provides the Minister of Finance with the authority to continue to make equalization payments according to the current formula for up to a year in the event that the renewal legislation is not in place by April 1, 2004.

Second, it provides the federal government with the authority to pay an additional $2 billion from the consolidated revenue fund to the provinces and territories for health.

Bill C-18 lays out the steps the government is taking to ensure that the provinces and territories receive the payments to which they are entitled, payments supporting the public services provided to Canadians.

The bill before us today enables the continuation of equalization payments while renewal legislation is finalized.

The current version of the legislation authorizing the federal government to make equalization payments to the provinces will expire on March 31, 2004.

While discussions on the five year renewal are underway with the provinces, Bill C-18 represents a preventive measure to authorize the federal government to continue making payments for up to a year, if necessary.

This will assure equalization receiving provinces that they will continue to receive payments if renewal legislation is not in place by the end of March. This is the critical point of the bill. If this legislation does not pass, then those payments cannot be made.

Without Bill C-18, the Government of Canada does not have the authority to make equalization payments, which would result in serious negative impacts for receiving provinces as payments would cease.

Let me briefly review how the program works.

To begin, payments are unconditional, meaning that provinces can spend their funds as they see fit on public services for their residents. Next, payments are calculated according to a formula which responds to the changing economic fortunes and circumstances of all of the provinces.

The formula measures the performances of provincial economies to the average fiscal capacities of the five middle income provinces, which forms a threshold or standard. As the relative fiscal performance of provinces go up and down, equalization entitlements go up and down. These increases or decreases in entitlements are the result of the formula working as it should, not the result of decisions by the Government of Canada to increase or decrease entitlements.

Provinces with revenue raising ability--or fiscal capacity as it is known in the jargon--below the threshold or standard amount receive equalization payments to bring their revenues up to the standard. At present, eight provinces are below the standard and qualify for federal support under the program. Only Ontario and Alberta are not recipients.

The third element of the program involves a floor, which provides provincial governments with protections against unexpected, large and sudden decreases in equalization payments that would otherwise be warranted by the straightforward application of the formula. The floor limits the amount by which the provinces' entitlements can decline from one year to the next.

Two built-in mechanisms ensure that the program remains current. The first is an ongoing review of the program by federal and provincial officials, which makes sure that the differences in fiscal capacity are measured as accurately as possible.

The second mechanism, and the one central to today's debate, is that renewal legislation must be introduced every five years following federal-provincial consultations. The last renewal was in 1999. The current legislation is set to expire on March 31 of this year, as I indicated earlier. The renewal legislation will guarantee that the program remains up to date and that the best possible calculations and data are used to determine equalization payments.

The renewal legislation will also guarantee that the integrity and fundamental objectives of the program are preserved. The government must be able to assure provinces that they will continue to receive equalization payments even if the renewal legislation is not passed by the end of the fiscal year.

Bill C-18 addresses this problem by enabling the continuation of payments for up to a year while the renewal legislation is being finalized. Passage of the bill would ensure that the public services which provinces fund through the equalization program will continue to be protected for the benefit of their citizens. When passed, the renewal legislation will both supersede the extension and be retroactive to April 1, 2004.

In considering Bill C-18, I urge hon. colleagues to keep in mind that the impact on equalization receiving provinces and their residents could be very significant if the bill is not passed. It is therefore imperative that this legislation be passed quickly.

Now, if I may, I will turn to the health part of the bill. As my hon. colleagues know, federal support for the Canadian health system is provided primarily through the CHST and the new health reform transfer.

Bill C-18 would amend the existing CHST to authorize payment of $2 billion as a supplement to the CHST. This fulfills the commitment made by the Prime Minister following the January 2004 first ministers meeting. It is also in keeping with commitments made in the 2003 first ministers accord on health renewal, the 2003 budget and the 2003 economic update.

I would like to point out that this funding is in addition to the increased federal investment of $34.8 billion over five years for health that was confirmed in the 2003 budget. As a result, this funding will bring the federal government's total commitment in support of the 2003 health accord to $37 billion over five years.

I would like to point out that this funding can be provided without the government going into deficit. I want to point out, as I accompanied the minister across the country, that one of the things we heard repeatedly is that the government should not go into deficit under any circumstances.

Passage of the bill will provide the provinces and territories with the flexibility to begin drawing down these funds as they require, which would help them better plan for the future and provide health care services to their residents.

I encourage my hon. colleagues to pass Bill C-18 without delay. The measures in the bill affect the provinces and territories and thus their residents who depend upon them for public services. Not only is additional funding for health part of the federal government's ongoing commitment to health care, it is being provided within a framework of balanced budgets which will ensure its sustainability over the long run.

As hon. members know, the Prime Minister intends to meet with his counterparts in the summer to discuss long term sustainability of our publicly funded health care system. In the meantime, the bill would ensure that our health care system continues to be a proud example of our national values at work, as recently described by the Prime Minister.

Further, the equalization provisions in the bill underscore the priority that the government places on this federal transfer and ensure uninterrupted funding to the provinces until the renewed legislation can be finalized.

Through our federal system of transfer payments, all Canadians are guaranteed equal access to health care, a safety net to support those most in need, freedom to move throughout the country to seek work, higher education and training available to all who qualify, and reasonably comparable services in whichever province they choose to live.

The measures in Bill C-18 are designed to ensure that those goals continue to be met.

Federal-Provincial Fiscal Arrangements Act
Government Orders

10:15 a.m.

Progressive Conservative

Loyola Hearn St. John's West, NL

Mr. Speaker, I listened with interest to my colleague opposite explain the bill and talk about the need to pass it so that the provinces can continue to receive the equalization payments beyond April 1. He also referred to the special payment for health care.

Let me put a couple of things in perspective. First, the $2 billion commitment announced just recently for health care, which will be put in following the passage of the legislation, is a help to the provinces. Is it what they need? It certainly is not what they need and is not what they asked for.

The money is a commitment that was made a number of years ago. We have heard over the last three years at least that the government would put more money into health care. A couple of years ago it was determined that it would be $2 billion. Last year we were promised the money but that it would depend on next year's budget and the surplus. We waited and waited. Now, in the days preceding the election of course, the $2 billion will be delivered.

The ironic thing is that the person who gets the credit for the money is not the person who committed it. It is not the finance minister who has pledged it in his next budget. It is the former finance minister and the present Prime Minister who will get the credit for giving the provinces $2 billion.

This same Prime Minister, when he was the finance minister, was the one who, in regulating his budgets, actually cut over $16 billion, which in today's dollars would be $25 billion.

If I were given the opportunity to give out $2 billion to people, people might be quite shocked. However, if at the same time they were going to return $25 billion to me, it would not be a bad deal. This is exactly what we see with the federal government. During the term of the former finance minister the government cut $25 billion in today's dollars from the health care budget to the provinces and now it offers, on the eve of an election, a paltry $2 billion. Nobody is buying it.

Let me talk about equalization. The parliamentary secretary is a fine fellow but he understands very little about equalization. He comes from the great province of Ontario which is one of the have, question mark, provinces, the other being Alberta. All the other provinces are considered have not.

If people in the other eight provinces are watching at this time of the morning they are probably wondering what the definition is of a have and have not province. My definition of have not provinces is that those are the provinces that have been shafted by Ottawa over the last x number of years, certainly in relation to the development of resources and the clawback which has left a number of our provinces in a position where they are classified as have not. Others might be farming provinces, that again have been totally and utterly ignored by the government to the point where their economy is regressing rather than moving forward.

Have and have not should not be terms that we use in this country. We should all be have provinces. We should not have to be lining up with our hands out to uncle Ottawa looking to get back some of our money.

I want to give a couple of figures. Over the last four years $14 billion has come out of the offshore development of Newfoundland. People might wonder why Newfoundland is not a have province. It is simply because of the mismanagement of the central government. The share that Newfoundland gets has amounted to about $300 million over four years; less than $100 million a year from a $14 billion industry. Anyone with any kind of a brain will know that there is something drastically wrong here.

Some people say that we cannot have our cake and eat it too. It is like the way we treat people who are receiving social assistance. Government sends them a cheque because, through no fault of their own, they cannot get into the workplace for whatever reason: sickness, lack of opportunities, lack of education, whatever. Then we encourage them to become productive members of society. We provide them with a job opportunity so they take the job even though it is only a part time job paying about $100. What happens at the end of the week? The government takes back an equal amount from what they are paid, and at the of the period they are no better off than they were before. They then ask themselves why they even bothered.

Government has to realize that in order to move the economy ahead we have to invest. We cannot cycle our money through the central government. That is not investing. That is investing in scandals. That is investing in giveaways. That is investing in putting money into the pockets of one's friends. We have to invest in the infrastructure of the provinces so that they can keep building the economy and develop the resources that they hold.

The member opposite mentioned that the formula is a fair one, that they take the five middle provinces. The only entity that says it is fair is the central government. Everyone else, all the premiers and all the provinces, say that it is not fair and that it should be based on a 10 province formula. When we argue that, the now Minister of Finance, the former minister of natural resources, who was one who retarded the development of our natural resources, says that the gap is narrowing. The only reason the gap is narrowing is that the economy of the two have provinces, Alberta and Ontario, dictates the amount of equalization the other provinces get. If one or the other of these provinces has a downturn, it affects the amount of equalization everyone gets and it narrows the gap.

Thanks to the Liberal government, the present government in Ontario, Ontario is seeing a dip in the economy which greatly affects the equalization formula. Alberta is doing well because of the development of its natural resources. When it first began to develop its oil industry in particular, it was allowed to hold on to its revenues for about a 10 year period. That gave Alberta the opportunity to invest in its infrastructure, to grow and to develop into a have province.

The same thing could happen in Nova Scotia, in Newfoundland and in Quebec. These provinces have rich natural resources but they must be allowed to develop them in co-operation with the federal government and on a sliding scale, undoubtedly. We do not want to be taking out and giving nothing but we must be fair. We have to give people the chance to get on their feet, and it can be done. A 10 year formula would certainly make a major difference to our provinces.

Let us look at fairness in the CHST funding. Instead of cutting $25 billion, let us make sure we pay the equal amount. When we constantly download on the provinces then the provinces, in many cases, have to pass it along to the municipalities.

Throughout the country, infrastructure is completely and utterly falling apart simply because of exactly what we are talking about this morning, the inappropriateness of the funding that is delivered to the provinces by the federal government, the people's own money.

Some people might say we have a surplus. Years ago when we had a Conservative government, we did not. Let us analyze it. During the early 1990s before the Liberals came into power, they talked about the deficit that they were handed. Forget the debt; they were talking about the deficit. The deficit was built up for two reasons, the need to continue social programs when times were tough and extremely high interest rates. If we had the same interest rates today, imagine the amount of debt payments we would have to make. How much of a surplus would we have?

The debt was passed on from a previous Liberal government which admittedly was added to somewhat, but a plan was put in place to address it. This is where the Liberal government is wrong. Where is the plan? It is 20 days today since the House resumed sitting and we have yet to see one piece of new legislation, as anybody who listens to the assessment of what is happening in this country would know.

We talk about elections. When is the election going to be? People say it has to be in the spring. Why? Because the government has no legislation. The Liberals have no plans. They have nothing to offer the people of the country, except to go on their knees to Canadians asking to please be voted back for another few years so they can continue to do nothing and crucify everyone at the provincial level. Where is the plan?

Remember free trade? Remember the GST? We did not like it and members over there fought against it. The Liberals won an election because of these two issues, but did they cancel free trade? Did they eliminate the GST as the Prime Minister when he was minister of finance promised to do? No, because these were necessities at the time in order to address the deficit while maintaining social programs.

The present government, because it is the same old government, came in, continued the GST and built an economy based on free trade which greatly enhanced the economy of this country, but the Liberals also made their own contribution to the surplus which we now have. They cut social programs. They cut $25 billion in equalization payments in CHST transfers to the provinces, $25 billion.

The Liberals overcharged on employment insurance, money taken directly out of the pockets of every working person in this country, to the tune of $40 billion. Imagine what $40 billion could do if the workers themselves had that kind of money to put into the economy. People who work make money and spend money. They spend money on goods and services, which creates more wealth, generates more taxes and builds the economy. What we see here is regression. They cut, take away and download on the provinces and municipalities. Everybody suffers all the way down.

With regard to natural resources, they ignored our fishery. There is a former fisheries minister here looking at me in admiration. He was one of the great fellows who had the will to do something, but those above him said, “Sorry, you cannot do it. We do not want to disrupt our friendship with other countries. If they want to be our friends, we will give them our fish”. If that is the way we are going to treat our resources, how are we going to grow the economy? How are we going to grow the country? The answer is, it ain't going to happen. That is what we see right now.

What is the best thing to do? Perhaps the government could start by coming up with a proper equalization program.

How popular is the bill? How popular is this offer to the provinces? Every single solitary province rejected it. They asked why after five years they had to extend the agreement for another year in order to finalize it. Surely, we knew five years go that it was going to run out. We knew four years ago that we had better start working on it. Three years ago, we should have been into it. At least a year ago, we should have been into the final stages working on new formulas, assessing the present economy, et cetera.

What happened? The Prime Minister was running around the country trying to become Prime Minister. The former prime minister was running around the world taking advantage of his last year in office. The ministers in the government, the ones responsible, were running around to see if they could get some money for their friends.

The business of the country was not getting done. That is why today we see the provinces still waiting for an equalization program. What are we doing? We are supporting the bill. Why are we supporting it? Simply because if the bill is defeated, the provinces' funding will be cut off completely. They will get nothing.

I always think of poor Oliver Twist. Please sir, could we have some more? It is becoming that way for the provinces. They come to Ottawa with their little bowls in their hands begging, please sir, could we have more?

Perhaps it is not the provinces that should worry. Perhaps it is not the municipalities. Perhaps it is not the people across the country, the workers, who have been ripped off. Perhaps they should not be sitting back asking, “What can we do? It is Ottawa's fault”. No, it is our fault collectively because we were the ones who put them there.

There is one thing that we can always remember. We put them there, but in light of everything that is happening, we have time to assess what we have done. As the old saying goes, the Lord giveth and the Lord taketh away. The people give power to the government and very soon the people will take it away.

Federal-Provincial Fiscal Arrangements Act
Government Orders

10:35 a.m.

Liberal

Robert Thibault West Nova, NS

Mr. Speaker, I want to congratulate the member for the first half of his speech at least, which I thought was on topic and raised some very interesting points. The second half burned a lot of time, obviously for the folks at home.

On the question of the 10 province formula, I agree with this. I think there are good things to consider in that which would have a positive effect for some of the provinces that have less. We should not use the term have not. I think it is better to say have less, they have potential that is yet to be developed.

The problem is that we have agreements from all provinces, it seems, if there is no cost to all provinces. If it is going to be true equalization then there probably has to be redistribution of wealth from provinces that have a lot to those which have less. If it was a cost sharing formula between the federal and the provincial governments, that everyone puts in, and the provinces agreed on the redistribution formula, I think it would take care of all that.

Does the member think there would still be agreement among all the provinces and would those with wealth participate?

The other question is the famous clawback provision on the provinces as they develop their resource sector and receive less equalization using the general formula. The Atlantic accord in the case of Newfoundland and Nova Scotia, which is favourable as opposed to all on land industries, I think does help the Atlantic provinces.

I do not know if all the provinces agree with that. I watched the premier of New Brunswick, my province, and he did not agree with it. When he spoke to Klein in Alberta, Klein said, “Of course I agree with you. Get a constitutional amendment”, which I thought was like saying, “Go fly a kite”. It did not seem to me to be a true agreement on the proposal. Constitutional amendments are not that easy to get.

I wonder why those provinces that raise that do it bilaterally with the federal government. They talk about it but do not bring it to the table when the provinces are there, as they are now. They have had over 40 meetings negotiating the equalization formula. Why is it not part of the repertoire? Is it that they do not find the same amount of cooperation from the 10 provinces?

Finally, my last question is on EI. I do not think the federal government should make any apologies for having a surplus in the EI account. We all know that there is no EI fund. It should be noted that the rates paid by business and individuals to that fund have been steadily decreasing. A surplus happens because jobs have been created. Less people are drawing from it. More people are contributing to it. That creates wealth. That creates investment.

That is what the member was speaking about earlier. I wonder if he would recognize that.

Federal-Provincial Fiscal Arrangements Act
Government Orders

10:35 a.m.

Progressive Conservative

Loyola Hearn St. John's West, NL

Mr. Speaker, those were some very serious solid questions.

I mentioned before that I had the opportunity to work with that individual in his former position as the minister of fisheries. We had a very good relationship. Some accomplishments were made because of the atmosphere he created in which we could work together. I believe that almost answers the question.

With respect to the EI surplus, let me remind the member that the EI surplus is three times what is recommended by the people who handle the funds. We do not need that much of a surplus in the event of any kind of a downturn. One-third of the surplus would be enough.

Why has it been increasing? Is it because of the great economy in this country? The answer is no. The answer is it is a lot harder to get on the EI program these days. Workers have to work longer and they obtain fewer benefits over a shorter period of time. There are all kinds of cuts to EI and to HRDC in particular, internally and externally. There are all kinds of reasons that the EI fund is growing and the people of Canada are paying the price.

Talking about the 10 province formula, about clawbacks, et cetera, let us lump them into one answer to save time. I mentioned in the introductory remarks to my answer that atmosphere has a lot to do with it. A tremendous amount of this depends on two words: leadership and trust. These are words that a lot of people think do not jibe with politics. We do not see any leadership any more in this country and we certainly do not see any trust. Nobody trusts anybody else.

The premiers and the provincial finance ministers around the negotiating table are human. There is always concern for their own area, that they have to look after their people. That is natural, but we have to remember we are part of a Confederation. Joining Confederation is like getting married; it is for better or for worse. We have to give and take.

I always remind my Albertan friends that in the 1930s when times were tough, it was fish from Nova Scotia and Newfoundland that helped keep them alive. Today they are contributing to both our provinces through the have and have not formula, or have and have less, whatever way we want to put it. Five or 10 years down the road as their oil fields dry up and ours come on stream, the reverse could happen. That is the way it should be.

In order to reach that, first of all we have to talk openly, we have to be honest and we have to put the figures on the table. However, there has to be trust. There has to be a belief that today is my day and tomorrow could be someone else's because everything turns around, as I said earlier when I talked about government. Things turn around. We have to remember that as partners in Confederation, we should be there in the good times but we should also be there in the bad times to help those who need help.

If we have that little bit of trust and some leadership to consolidate the proper formulas, we may not get what we want ideally, but we will get something that will satisfy most of us.

Federal-Provincial Fiscal Arrangements Act
Government Orders

10:40 a.m.

NDP

Yvon Godin Acadie—Bathurst, NB

Mr. Speaker, does my colleague agree that in 1986 when the Brian Mulroney government took the money from the employment insurance fund and threw it into the general fund, that started to create the real problem that we have today?

We hoped that the Liberals would not follow the track of Brian Mulroney, that they would not cut the EI, but it surely did start in 1986 when Brian Mulroney's government put the employment insurance account into the general fund. Then it became a free for all. They would take that money and put it in the budget and then have a zero deficit and so on. That is where it started. I would like to hear my colleague's view on that issue.

I would also like his view on what the new leader of the Conservative Party thinks about Atlantic Canada and employment insurance.

Federal-Provincial Fiscal Arrangements Act
Government Orders

10:40 a.m.

Progressive Conservative

Loyola Hearn St. John's West, NL

Mr. Speaker, to answer the first question, I have no argument with the member. Regarding the EI fund, usually most government revenues that are taken in go into the general account for the needs of all the people across the country.

However, the minute we identify specific accounts, such as the EI account, the money that goes into that should be used for that purpose, whether it be for benefits during layoffs, retraining or getting more people back into the workplace. We are doing an abysmal job. If we find we are collecting more from the worker than we need to do these things, that money should go back into the pockets of the worker.

I would remind him that back in the late eighties and early nineties, the economy was in rough shape. The deficit was huge and interest rates were astronomical, so consequently, governments were looking for every way to balance budgets. Desperate times called for desperate measures.

In relation to the leader of the Conservative Party, we do not know who the leader is going to be at this stage. We have absolutely no idea. It is a three way fight; three excellent people.

However, in the party to which I will belong, the interest in Atlantic Canada will not change. In fact, one of the things we are seeing, certainly within our leadership--I do not think it is true opposite--is a concern about learning more about the country. This is a big country. We have different economies throughout the country and different needs.

We must understand the country and the people of the country if we are going to be able to offer the proper services these people need. It is a matter of leadership. I think we will have it, and I am sure he would be glad to come with us.

Federal-Provincial Fiscal Arrangements Act
Government Orders

10:45 a.m.

Bloc

Pierre Paquette Joliette, QC

Mr. Speaker, I am extremely pleased to take part in this debate on this stunt known as Bill C-18, an act respecting equalization and authorizing the Minister of Finance to make certain payments related to health. This is typical of the federal government, the Liberals and the Prime Minister. The sole purpose of this bill is to get votes, nothing more.

First, contrary to the bill introduced in the previous session, this bill combines two things that have nothing to do with one another.

On the one hand, there is the one-year extension of the current equalization program and, on the other hand, there is the $2 billion transfer first promised by Jean Chrétien, then by the hon. member for Ottawa South and, finally, promised and delivered by the current Prime Minister.

Obviously, the Bloc Quebecois is not only in favour of this $2 billion transfer, it has been demanding it for a very long time. In fact, we demanded it back when the federal government and the finance minister, both old and new, were telling us that the federal coffers were empty and that the government was scraping the bottom of the barrel to find this money for Quebec and the provinces.

We are therefore in complete agreement. Not only are we in agreement, but I wanted to make an amendment in the Standing Committee on Finance to ensure that this $2 billion was a recurring item, to rectify the fiscal imbalance and help the provinces and Quebec fulfill their health care commitments.

Consequently, we have no real problem with this aspect of the bill. However, with regard to the one-year extension—I want this to be clear, because the bill clearly indicates an extension until March 31, 2005—the current equalization program is not acceptable to those defending Quebec's interests. The loss to the provinces is several billion dollars; the loss to Quebec is about $1.4 billion.

It is out of the question to ask those with Quebeckers' interests at heart, such as the Bloc Quebecois, to approve of such extensive cuts. This would totally contradict the mandate that Quebeckers have given us.

Obviously, the Liberals knew the Bloc Quebecois were opposed to the extension of this equalization formula. As I said, we had made that clear from the time the previous bill on the same subject was introduced. So they thought that, by putting the transfer of $2 billion into the same bill, they would probably manage to trick us, trick the people of Quebec and make us feel obliged to support such a bill.

We are, however, capable of walking and chewing gum at the same time. We are capable—as Quebeckers are clear on that—of explaining that, while being in agreement with the transfer of $2 billion for health, we can be opposed to extending the equalization formula for the coming year, because we will be penalized in the long run, both in Quebec and in the Atlantic provinces.

We asked the committee to split the bill, so that we might vote separately on extension of the equalization formula on the one hand and on the $2 billion transfer for health on the other. The committee refused. The Liberals refused.

As I said, the result of this is that they are making us speak out against the whole bill although—I repeat—we agree with the $2 billion transfer. I even tried to propose that this be a recurring amount, but for procedural reasons, unfortunately, that was not possible.

So, the first stunt was to combine two things that have nothing to do with each other, except that they both have to do with money. The Bloc's position on the two are diametrically opposite.

The people of Quebec are intelligent people and were not taken in by such a stunt. We will not play the government's, the Liberals, and the Prime Minister's game.

Then, there is the second stunt. By combining the two, the Liberals, the Prime Minister, the Minister of Finance, are suggesting to the provinces, Quebec and the Atlantic provinces in particular, that in the end the equalization formula is really not very advantageous. “But, with the $2 billion we are going to transfer to you, you will stand to gain”, they say.

This is false. No matter how one looks at it, Quebec and the Atlantic provinces in particular, stand to lose with Bill C-18.

Let me give an example. There are several ways to evaluate this loss. Let us look at what is happening with the equalization estimates made by the federal government, by the Department of Finance.

In reality, what the federal government, the Liberals and the Prime Minister are doing is this: on the one hand, they are giving $2 billion for health but, on the other hand, they are taking back that money through the equalization program. As I said, we are not fooled by this scheme.

Here are the October 2003 equalization estimates for Quebec. For 2002-03, it was estimated that Quebec would receive $4.662 billion. In February 2004, according to the most recent estimates released on Monday, the amount is down to $3.985 billion for 2002-03. This is a loss of $677 million to Quebec, based on estimates made by the federal government itself.

For the year 2003-04, the estimate made in October 2003 was for a payment of $4.525 billion to Quebec. In fact, it was on that basis that the Quebec finance minister Séguin prepared his budget. Now, based on the February 2004 estimate, under the equalization formula that the federal government wants to extend for a year, we are finding out that the amount of $4.525 billion is down to $3.802 billion. This is a loss of $723 million to Quebec. And the government would want us to approve that?

For next year we have an initial estimate, therefore we cannot compare it to a previous estimate, but there is talk of equalization for Quebec of $3.691 billion. That means that in addition to the cut in equalization for 2003-04, in 2004-05 an estimated $111 million more will be cut. In total, based on its own estimates, the federal government is telling us that this year it is giving Quebec $1.4 billion less. That is the current estimate.

Of course the Minister of Finance says he is going to spread this out over time. Nonetheless, this is a loss. In the coming years, the Government of Quebec will have to make do with a lot less money in transfers from the federal government.

I remind this House that the February 2003 agreement is expiring soon. This year Quebec will receive only $365 million under that agreement. It is clear that the money situation in Quebec—and in the Atlantic provinces—is going to be especially difficult, if not disastrous this year and in the years to follow.

This is all because of the federal government's own estimate. Now, as for Quebec's expectations, what was in Mr. Séguin's budget? For 2001-02, we expected to receive $5.336 billion from the federal government. Just imagine. I am talking about the 2001-02 budget. That money was spent. Ottawa turned around and said it would not be $5.336 billion, but $4.690 billion. That is a net loss of $646 million in terms of what Quebec was expecting and what Quebec spent based on estimates.

For 2002-03, we expected to receive $5.315 billion from the federal government in equalization. On Monday, we were told it would be $3.985 billion. That is a loss for Quebec of $1.330 billion. That money has already been spent.

For the coming year, we are being told we will be given a little more. Quebec had anticipated a cut in equalization. In his September study, Mr. Séguin had reduced his equalization expectations to $3.290 billion, given the problem with this formula. We were told that there would be a little more money, $3.802 billion. Note that this is less than we expect to spend this year.

In total, with respect to Quebec's expectations, with respect to the money that has often been spent on health, in accordance with Quebeckers' priorities, it amounts to $1.464 billion less.

With the exception of Alberta, this is taking place in an extremely fragile financial situation. That is true for Quebec and for all the provinces. There is a risk that some provinces, particularly the Atlantic provinces, will find themselves with a deficit. And they want us to approve that? Whether we look at it from one angle or another, Quebec will be losing about $1.5 billion with this equalization formula. That is the money that was lost in the past; imagine what it will be in the future.

All provinces that receive equalization payments will be affected. If we look at all the provinces, in October 2003, the forecast equalization payment for 2002-03 was $9.709 billion. On Monday, we were told that it would be $8.73 billion, or a decrease of $976 million; the provinces will receive nearly $1 billion less.

For 2003-04, the current fiscal year, the payment forecast last October was $10.097 billion. Now we hear that it will be only $8.779 billion, or a loss to all provinces of $1.318 billion. In total, with the forecasts and the estimates that were published on Monday, this amounts to $2.2 billion less that the provinces will receive in transfer payments because of this equalization formula.

And they want us to agree to extend this for a year, because an election is coming up? No, Mr. Speaker. It is particularly hard on Quebec and the Atlantic provinces. I shall explain it to you, and since you are an extremely intelligent person, Mr. Speaker, you will understand right away.

There are two major transfer payments in the Canadian system. There is the Canadian health and social transfer, which is calculated on the basis of a percentage of the population, and there is equalization, which is based on the goal of reducing the gaps between the provinces' fiscal capacities. In this context, consideration is given not only to population figures, but also to the socio-economic status of the provinces.

Thus, they take $2.2 billion out of the equalization system that helps the poorest provinces, and, they put $2 billion back in, through the Canadian health and social transfer. But the CHST funds are divided proportionally among the provinces, based on population, not taking into account the socio-economic situation in the various provinces.

I see you are signalling me to stop, Mr. Speaker.

Federal-Provincial Fiscal Arrangements Act
Government Orders

10:55 a.m.

The Speaker

Yes, precisely, the hon. member for Joliette will have nine minutes when we resume debate.

Federal-Provincial Fiscal Arrangements Act
Government Orders

10:55 a.m.

Bloc

Pierre Paquette Joliette, QC

That is not a lot of time to denounce the Liberals.

Federal-Provincial Fiscal Arrangements Act
Government Orders

10:55 a.m.

The Speaker

It is not a lot, but it will do. For a twenty minute speech, nine minutes is not bad. The hon. member for Joliette will have nine minutes to conclude his speech after oral question period.

The hon. member for Simcoe North.

Sport and Physical Activity
Statements By Members

10:55 a.m.

Liberal

Paul Devillers Simcoe North, ON

Mr. Speaker, sport and physical activity are important to our country and offer significant ways for Canadians to participate in their communities and society.

Sport and physical activity are effective vehicles for social change, and participation in sport and physical activity can improve the health of Canadians and reduce health care costs.

Sport and physical activity transcends party lines. That is why this week, at the request of the Minister of State for Sport and at the instigation of the group, Sport Matters, the All Party Sport and Physical Activity Caucus was formed. One of the goals of this caucus is to raise the profile of sport and physical activity.

I was appointed chair of this informal all party caucus on sport and physical activity and, at our next meeting, I intend to ask the caucus to confirm the member for Longueuil as our deputy chair.

I invite all members of the House and the Senate to participate in this important caucus to ensure the well-being of Canadians.

Liberal Party of Canada
Statements By Members

10:55 a.m.

Canadian Alliance

Paul Forseth New Westminster—Coquitlam—Burnaby, BC

Mr. Speaker, the coming election is about quality accountable representation in the House of Commons. Can the taxpayer trust that public business will be administered wisely?

The culture of corruption of the Liberals is descriptive of waste and ingrained behaviour that finds ways to cheat the system. It is called pay-off: get public tax dollars paid to Liberal friends.

Liberals think that politically unconnected average Canadians do not care about what goes on. Liberals calculate that the voter will be forgiving with just a cover of excuses.

It is not an inflated observation to say that Liberals cannot manage the people's business. They have no desire to be accountable at the ballot box in between elections or stay within the democratic bounds of ongoing public consent.

In contrast, the new Conservative Party is inherently democratic. High quality accountable representation that respects the taxpayer is a modest, honest, achievable vision that Canadians can fully support.

Black History Month
Statements By Members

11 a.m.

Liberal

Robert Thibault West Nova, NS

Mr. Speaker, to celebrate Black History Month, every year the Government of Canada holds the Mathieu Da Costa Challenge. I am pleased to congratulate all of those to whom the Minister of State for Multiculturalism and Status of Women had the pleasure of presenting certificates of achievement yesterday morning.

The nine winners, aged 11 to 17 years, received awards for their achievements in five categories: Best Essays in English; Best Essays in French; Best Artistic Representations; Special Award for Best Essay in English that celebrates the contribution of a black Canadian; and Special Award for Best Essay in French that celebrates the contribution of a black Canadian.

Once again, congratulations to all the winners.

Canadian Film Industry
Statements By Members

11 a.m.

Liberal

Serge Marcil Beauharnois—Salaberry, QC

Mr. Speaker, I encourage my colleagues in the House and the public to congratulate those Canadians nominated this year for an Oscar.

We are extremely proud of our distinguished Canadians who have been nominated for six Oscars. Denys Arcand is up for best screenplay and best foreign language film for The Barbarian Invasions . Chris Hinton has been nominated for best animated short for Nibbles . Composer Howard Shore has been nominated for two Academy awards for The Lord of the Rings : best musical score and best song. Benoit Charest is also up for best song for The Triplets of Belleville .

As these prestigious nominations demonstrate, last year was a great year for the Canadian film industry. Canada is full of world-class artists. We wish them every success on Oscar night.